Principles of Information Systems, Tenth Edition

1
Principles of Information Systems, Tenth Edition

• Chapter 9
• Enterprise Systems

2
Principles and Learning Objectives

• An organization must have information systems
  that support routine, day-to-day activities and
  that help a company add value to its products and
  services
• Identify the basic activities and business
  objectives common to all transaction processing
  systems
• Describe the transaction processing systems
  associated with the order processing, purchasing,
  and accounting business functions

3
Principles and Learning Objectives (continued)

• A company that implements an enterprise resource
  planning system is creating a highly integrated
  set of systems, which can lead to many business
  benefits
• Discuss the advantages and disadvantages
  associated with the implementation of an
  enterprise resource planning system
• Identify the challenges that multinational
  corporations face in planning, building, and
  operating their enterprise systems

4
Why Learn About Enterprise Systems?

• In our service-oriented economy
• Outstanding customer service has become a goal of
  virtually all companies
• Effective use of enterprise systems
• Will be essential to raise the productivity of
  your firm, improve customer service, and enable
  better decision making

5
An Overview of Transaction Processing Systems

• Transaction processing systems (TPSs)
• Capture and process detailed data necessary to
  update records about fundamental business
  operations
• Include order entry, inventory control, payroll,
  accounts payable, accounts receivable, general
  ledger, etc.
• Provide valuable input to
• Management information systems, decision support
  systems, and knowledge management systems

6
An Overview of Transaction Processing Systems
(continued)
7
Traditional Transaction Processing Methods and
Objectives

• Batch processing system
• Data processing in which business transactions
  are
• Accumulated over a period of time
• Prepared for processing as a single unit or batch
• Online transaction processing (OLTP)
• Data processing in which each transaction is
  processed immediately

8
(No Transcript)
9
(No Transcript)
10
Traditional Transaction Processing Methods and
Objectives (continued)

• Organizations expect their TPSs to
• Capture, process, and update databases of
  business data
• Ensure that the data is processed accurately and
  completely
• Avoid processing fraudulent transactions
• Produce timely user responses and reports
• Reduce clerical and other labor requirements
• Help improve customer service
• Achieve competitive advantage

11
Traditional Transaction Processing Methods and
Objectives (continued)

• A TPS typically includes the following types of
  systems
• Order processing systems
• Accounting systems
• Purchasing systems

12
Traditional Transaction Processing Methods and
Objectives (continued)
13
Transaction Processing Systems for Small and
Medium-Size Enterprises (SMEs)

• Many software packages
• Provide integrated transaction processing system
  solutions for small and medium-size enterprises
  (SMEs)
• Camp Logan Cement
• Was able to get up and running in a month with
  Intuit Enterprise Solutions

14
Transaction Processing Systems for SMEs
(continued)
15
Transaction Processing Activities

• TPSs
• Capture and process data that describes
  fundamental business transactions
• Update databases
• Produce a variety of reports
• Transaction processing cycle
• The process of data collection, data editing,
  data correction, data manipulation, data storage,
  and document production

16
Transaction Processing Activities (continued)
17
Data Collection

• Capturing and gathering all data necessary to
  complete the processing of transactions
• Data collection can be
• Manual
• Automated via special input devices
• Data should be
• Collected at source
• Recorded accurately, in a timely fashion

18
Data Collection (continued)
19
Data Editing

• Checking data for validity and completeness to
  detect any problems
• Examples
• Quantity and cost data must be numeric
• Names must be alphabetic

20
Data Correction

• Reentering data that was not typed or scanned
  properly
• Error messages must specify the problem so proper
  corrections can be made

21
Data Manipulation

• Performing calculations and other data
  transformations related to business transactions
• Can include
• Classifying data
• Sorting data into categories
• Performing calculations
• Summarizing results
• Storing data in the organizations database for
  further processing

22
Data Storage

• Updating one or more databases with new
  transactions
• After being updated, this data can be further
  processed and manipulated by other systems

23
Document Production and Reports

• Generating output records, documents, and
  reports
• Hard-copy paper reports
• Displays on computer screens
• Results from one TPS can be inputs to another
  system

24
Enterprise Resource Planning and Customer
Relationship Management

• Enterprise resource planning (ERP)
• Set of integrated programs that manage a
  companys vital business operations for an entire
  organization
• Business process
• Set of coordinated and related activities that
  takes one or more kinds of input and creates an
  output of value to the customer of that process

25
Enterprise Resource Planning and Customer
Relationship Management (continued)
26
An Overview of Enterprise Resource Planning

• ERP systems
• Evolved from materials requirement planning
  systems (MRP) developed in the 1970s
• Large organizations
• The first to take on the challenge of
  implementing ERP

27
Advantages of ERP

• Improved access to data for operational decision
  making
• Elimination of costly, inflexible legacy systems
• Improvement of work processes
• Upgrade of technology infrastructure

28
Disadvantages of ERP Systems

• Expense and time in implementation
• Difficulty implementing change
• Difficulty integrating with other systems
• Difficulty in loading data into new ERP system
• Risks in using one vendor
• Risk of implementation failure

29
Leading ERP Systems

• No one ERP software solution from a single vendor
  is best for all organizations
• SAP
• Largest and most-recognized ERP solution provider
  among Fortune 1000 and Global 5000 organizations
• Microsoft and SAP
• Partnered in the development of Duet

30
ERP for Small and Medium-Size Enterprises (SMEs)

• Many SMEs elect to implement open-source ERP
  systems
• Reasons for customization
• Customization is needed for your other business
  systems to work with the ERP package
• You need additional data fields and/or different
  field sizes than what comes with the standard
  system
• Customization is needed to meet regulatory
  requirements

31
Supply Chain Management (SCM)

• A system that includes
• Planning, executing, and controlling all
  activities involved in raw material sourcing and
  procurement
• Converting raw materials to finished products,
  and warehousing and delivering finished product
  to customers

32
Supply Chain Management (SCM) (continued)

• Process for developing a production plan
• Sales forecasting
• Sales and operations plan (SOP)
• Demand management
• Detailed scheduling
• Materials requirement planning (MRP)
• Purchasing
• Production
• Sales ordering

33
Financial and Managerial Accounting and ERP

• ERP systems
• Do not work directly with production machines, so
  they need a way to capture information about what
  was produced
• Retailers as well as manufacturers
• Use demand forecasting to match production to
  consumer demand and to allocate products to stores

34
Financial and Managerial Accounting and ERP
(continued)

• General ledger
• Main accounting record of a business
• ERP system
• Captures transactions entered by workers in all
  functional areas of the business
• Creates associated general ledger record to track
  the financial impact of the transaction

35
Financial and Managerial Accounting and ERP
(continued)

• Financial accounting
• Captures and records all transactions that affect
  a companys financial state
• Uses these documented transactions to prepare
  financial statements to external decision makers
• Managerial accounting
• Provides data to enable the firms managers to
  make decisions about current and future operations

36
Business Intelligence and ERP

• Business intelligence (BI)
• Gathering enough of the right information to
  shine a spotlight on the organizations
  performance
• Essential component of an organizations ERP
  system
• BI tools are used to
• Access all the operational data captured in the
  ERP database, analyze performance on a daily
  basis
• Highlight areas for improvement, and monitor the
  results of business strategies

37
Customer Relationship Management

• Goal is to understand and anticipate the needs of
  current and potential customers
• Used primarily by people in
• The sales, marketing, and service organizations
  to capture and view data about customers and to
  improve communications
• CRM software
• Automates and integrates the functions of sales,
  marketing, and service in an organization

38
Customer Relationship Management (continued)
39
Customer Relationship Management (continued)

• Key features of a CRM system
• Contact management
• Sales management
• Customer support
• Marketing automation
• Analysis
• Social networking
• Access by smartphones
• Import contact data

40
Customer Relationship Management (continued)
41
Hosted Software Model for Enterprise Software

• Many business application software vendors
• Are pushing the use of the hosted software model
  for SMEs
• Using the hosted software model
• Means the small business firm does not need to
  employ a full-time IT person to maintain key
  business applications

42
Hosted Software Model for Enterprise Software
(continued)
43
International Issues Associated with Enterprise
Systems

• Challenges that must be met by an enterprise
  system of a multinational company include
• Different languages and cultures
• Disparities in IS infrastructure
• Varying laws and customs rules
• Multiple currencies

44
Different Languages and Cultures

• In some cultures, people do not routinely work in
  teams in a networked environment
• Multinational companies
• Can establish close connections with their
  business partners
• Roll out standard IS applications for all to use

45
Disparities in Information System Infrastructure

• Lack of a robust or a common information
  infrastructure can create problems
• Many countries telecommunications services are
  controlled by a central government or operated as
  a monopoly
• No incentives to provide fast and inexpensive
  customer service

46
Varying Laws and Customs Rules

• Numerous laws can affect collection and
  dissemination of data
• Examples
• Labor laws in some countries prohibit recording
  of worker performance data
• Some countries have laws limiting the
  trans-border flow of data linked to individuals
• Trade custom rules between nations
• North American Free Trade Agreement (NAFTA)

47
Multiple Currencies

• Enterprise system of multinational companies must
  conduct transactions in multiple currencies
• Systems must
• Be current with foreign currency exchange rates
• Handle reporting and other transactions
• Issue vendor payments and customer statements
• Record retail store payments
• Generate financial reports in the currency of
  choice

48
Summary

• Transaction processing systems (TPSs)
• Are at the heart of most information systems in
  businesses today
• Batch and online processing
• The collection of transactions into batches
• TPSs perform the following basic activities
• Data collection, data editing, data correction
• Data manipulation, data storage, document
  production

49
Summary (continued)

• Enterprise resource planning (ERP)
• Software that supports the efficient operation of
  business processes
• Most firms use ERP systems to
• Support financial and managerial accounting and
  business intelligence
• Organizations are implementing CRM systems to
  manage all aspects of customer encounters